LOCAL CURRENCY DEBT: After the storm

In the wake of a brutal sell-off, investors are rushing back to local currency emerging market debt. But this time, the bet is no longer one way

By Katie Llanos-Small and Taimur Ahmad

Mexico’s state-owned oil company Pemex marked a
turning point for Latin borrowers in September when it
succeeded in selling a peso-denominated global depository note.

It was the first such local currency instrument sold since
the bond market re-priced spectacularly in May and June, on
expectations of tighter global liquidity.

"We were able to issue this local bond, even though the
market was in a very complicated situation," says Rodolfo
Campos, Pemex’s treasurer.

The oil giant raised 10.4 billion Mexican pesos ($818
million) by selling the GDN. Investors bought the bonds, but it
was tougher than the banks running the deal had expected. The
bond was priced to yield 7.19%, as much as 40 basis points
cheaper than early indications.

Yet the deal represented the first sign of life in the
global-local...